New Century Shipbuilding Limited

New Century Shipbuilding Limited is one of the largest shipbuilding groups in the PRC, ranked 5th domestically and 13th worldwide in terms of orderbook measured by deadweight tons "DWT".

Its major products are medium and large sized oil tankers and bulk carriers and its shipyards are located in Jinjiang City, Jiangsu Province.

Revenue rose from RMB 7,043.8m in FY2007 to RMB 11,159.2m in FY2009 and net profit rose from RMB 405.8m to RMB 2,348.6m in the same period.

As of March 31, 2010, the order book is RMB 23.8 billion for Bulk Carriers and RMB 3.5 billion for Oil Tankers.

The Company is offering 560m New Shares at a maximum price of $1.19 and the offer price will based on a book-running exercise. The company also intends to distribute no less than 20% of its annual profit from 2010 to 2012.

In US$ terms, the company generated sales of US$1.6 billion and net profit of US$461.4m for the year ended 31 Dec 2009. Based on the post IPO no. of shares, the EPS was 7.70 US cents. Assuming the US$/SG$ rate is 1.38, the EPS is 10.63 Singapore cents and the company is listing at the historical PER of 11.1x.

As of yesterday, Cosco is trading at 33x and Yangzijiang at 9.2x.  As such, New Century could be a better alternative in term of valuation and good dividend prospects for the next 3 years. than Cosco. Investors in Cosco might want to consider switching into New Century.

The public tranche will close on May 5, 8am and the price will be then determined. The IPO will start trading on 11 May. With most markets dropping in tandem due to the Greek debt problems, it is likely to be priced below the $1.19 indicative price.

IPO punters may want to avoid this IPO in this poor market sentiments and investors who want exposure to this counter should be better off buying from the market post listing.

NOTE:  THIS IPO WAS SUBSEQUENTLY WITHDRAWN ON 5 MAY 2010